Widmer Watercraft’s predetermined overhead rate is 200% of direct labor. Information on the company’s production activities during May follows. Purchased raw materials on credit, $240,000. Materials requisitions record use of the following materials for the month. Job 136 $ 49,500 Job 137 32,500 Job 138 19,400 Job 139 22,800 Job 140 6,800 Total direct materials 131,000 Indirect materials 20,000 Total materials used $ 151,000 Paid $15,000 cash to a computer consultant to reprogram factory equipment. Time tickets record use of the following labor for the month. These wages were paid in cash. Job 136 $ 12,100 Job 137 10,800 Job 138 37,900 Job 139 39,400 Job 140 3,600 Total direct labor 103,800 Indirect labor 25,000 Total $ 128,800 Applied overhead to Jobs 136, 138, and 139. Transferred Jobs 136, 138, and 139 to Finished Goods. Sold Jobs 136 and 138 on credit at a total price of $540,000. The company incurred the following overhead costs during the month (credit Prepaid Insurance for expired factory insurance). Depreciation of factory building $ 69,000 Depreciation of factory equipment 38,000 Expired factory insurance 10,000 Accrued property taxes payable 36,500 Applied overhead at month-end to the Work in Process Inventory account (Jobs 137 and 140) using the predetermined overhead rate of 200% of direct labor cost. Prepare journal entries to record events and transactions
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Widmer Watercraft’s predetermined
- Purchased raw materials on credit, $240,000.
- Materials requisitions record use of the following materials for the month.
| Job 136 | $ | 49,500 | |
| Job 137 | 32,500 | ||
| Job 138 | 19,400 | ||
| Job 139 | 22,800 | ||
| Job 140 | 6,800 | ||
| Total direct materials |
131,000 |
||
| Indirect materials | 20,000 | ||
| Total materials used | $ | 151,000 | |
- Paid $15,000 cash to a computer consultant to reprogram factory equipment.
- Time tickets record use of the following labor for the month. These wages were paid in cash.
| Job 136 | $ | 12,100 | |
| Job 137 | 10,800 | ||
| Job 138 | 37,900 | ||
| Job 139 | 39,400 | ||
| Job 140 | 3,600 | ||
| Total direct labor | 103,800 | ||
| Indirect labor | 25,000 | ||
| Total | $ | 128,800 | |
- Applied overhead to Jobs 136, 138, and 139.
- Transferred Jobs 136, 138, and 139 to Finished Goods.
- Sold Jobs 136 and 138 on credit at a total price of $540,000.
- The company incurred the following overhead costs during the month (credit Prepaid Insurance for expired factory insurance).
| $ | 69,000 | ||
| Depreciation of factory equipment | 38,000 | ||
| Expired factory insurance | 10,000 | ||
| Accrued property taxes payable | 36,500 | ||
- Applied overhead at month-end to the Work in Process Inventory account (Jobs 137 and 140) using the predetermined overhead rate of 200% of direct labor cost.
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